The rupee on Tuesday closed at a two-month high of 64.41 against the dollar, as dollar selling in the onshore market and downward movement of the greenback in the offshore non-deliverable forwards (NDF) pushed the currency higher. The rupee closed nine paise higher against the dollar compared to Monday’s closing, aided by sale of a large quantity of the greenback by a conglomerate through a foreign bank, said a currency dealer. “We understand that the company sold at least $400 million of dollar currency in one go during the morning session. This led to the triggering of stop losses at around 64.50 levels, which pushed the Rupee even higher,” the dealer said. Some market experts suggest that dollar selling in the offshore NDF market is likely to have impacted the onshore currency rate. The one month NDF was trading at 64.56 on Tuesday evening, up 13 paise from Monday. In the NDF market, the Rupee has been on an upward move over the past one week. “This pressure is believed to have translated onto the onshore levels,” said a treasurer at a foreign bank.
The rupee has been one of the better performing currencies among its emerging market peers. On a year-to-date basis, the currency has given a return of 5.45%. Compared to this, the Indonesian Rupiah has given a return of -0.27%, the South African Rand has recorded a return of -0.01% while the Chinese Renminbi has given a return of 5.24%. The Russian Ruble and Malaysian Ringgit performed better, returning 5.57% and 9.35%, respectively. According to currency dealers, the Rupee might weaken over the next one month on the back of news from the US, including on the possibility of a Fed rate hike. Come January, though, the currency might firm up again as $2.65 billion of fresh investment limits will be offered to foreign portfolio investors (FPIs) for investing in Indian corporate bonds.